- How do you prepare a house
to sell?
Doing whatever you can to put your
house's best face forward is very important if you want to get close to your asking price
or sell as quickly as possible. Short of spending a lot of money, there are several steps
people can take to make their home show better:
- Sweep the sidewalk, mow the lawn, prune the bushes, weed the
garden and clean debris from the yard.
- Clean the windows (both inside and out) and make sure the
paint is not chipped or flaking. And speaking of paint, if your home was built before
1978, new federal law gives a buyer the right to request a lead inspection. If you think
you might have some problems, do the inspection yourself beforehand and make any fixes you
can.
- Be sure that the doorbell works.
- Clean and spruce up all rooms, furnishings, floors, walls and
ceilings. It's especially important that the bathroom and kitchen are spotless.
- Organize closets.
- Make sure the basic appliances and fixtures work. Get rid of
leaky faucets and frayed cords.
- Make sure the house smells good: from an apple pie, cookies
baking or spaghetti sauce simmering on the stove. Hide the kitty litter.
- Put vases of fresh flowers throughout the house.
- Having pleasant background music playing in the backgroun also
will help set your stage.
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- How do you find
government-repossessed homes?
The U.S. Department
of Housing and Urban Development acquires properties from lenders who foreclose on
mortgages insured by HUD. These properties are available for sale to both
homeowner-occupants and investors.
You can only purchase HUD-owned properties through a licensed
real estate broker. HUD will pay the broker's commission up to 6 percent of the sales
price.
Down payments vary depending on whether the property is
eligible for FHA insurance. If not, payments range from the conventional market's 5 to 20
percent.
One caution. HUD homes are sold "as is," meaning
limited repairs have been made made but no structural or mechanical warranties are
implied.
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- Where are interest
rates headed?
No one knows for sure where rates
are headed.Beyond public policies put in place by the Federal Reserve Board, there are no
laws that govern mortgage rates. Historically, usury laws were used to prevent lenders
from charging sky-high interest rates when lending money. But in some states where there
are usury laws, banks, thrifts and a number of other financial institutions are exempt
from the law.
Today, interest rates are governed solely by the financial
markets and by Federal Reserve Board action, neither of which can be predicted with
absolute certainty.
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- How do you lock in an
interest rate?
Locking in a mortgage rate with a
lender is one way to ensure that same rate still will be available when you need it.
Lock-ins make sense when borrowers expect rates to rise
during the next 30 to 60 days, which is the usual length of time lock-ins are available.
A lock-in given at the time of application is useful because
it may take the lender several weeks or longer to prepare a loan application (though
automated loan practices are cutting this time dramatically).
However, some lenders require borrowers to pay lock-in fees
to assure particular rates and terms. Be sure to check that the rates and points are
guaranteed and that your lock-in period is long enough. If your lock-in expires, most
lenders will offer the loan based on the prevailing interest rate and points.
Lenders may have preprinted forms that set out the exact
terms of the lock-in agreement. Others may only make an oral lock-in promise on the
telephone or at the time of application.
Resources:
- "A Consumer's Guide to Mortgage Lock-Ins," published
by the Federal Reserve Board and Office of Thrift Supervision, Washington, D.C.
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- How do you choose between
fixed and adjustable rates?
There is risk involved
in selecting an adjustable rate mortgage, or ARMs, because rates may go up. On the other
hand, a fixed-rate loan offers good protection against rising interest rates but the
borrower is stuck with the initial rate if interest rates drop.
Statistics show that home buyers who have chosen ARMs since
1981 have saved thousands of dollars. For a period, the percentage of home buyers applying
for ARMs rose substantially, then buyers and homeowners began flocking to fixed-rate
loans.
Whether to opt for a fixed or adjustable rate mortgage is a
matter of personal choice. The first route offers stable payments; the second offers lower
initial payments.
Another consideration is the length of time a buyer plans to
own the home. If you're planning on moving within three or four years, an ARM makes sense
even if rates do nothing but rise during that period of time.
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- What are rates for FHA
and VA loans?
There are no set interest rates for
FHA and VA loans. The FHA stopped regulating rates in 1983 and the VA followed suit soon
after. Shop around for the best rate.
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- How do you get a
low-interest rate loan?
Price discounts and
interest rate buydowns are common incentives offered by new-home builders trying to
overcome slow sales.
Buydowns are a financing technique used to reduce the monthly
payment for the borrower during the initial years of the loan. Under some buydown plans, a
residential developer, builder or the seller will make subsidy payments (in the form of
points) to the lender that "buy down," or lower, the effective interest rate
paid by the home buyer.
State agencies often offer lower rate loans. But to qualify,
borrowers usually must be a first-time home buyer and meet income limits based on the
median income level of their county.
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- How are the rates set for
seller financing?
The interest rate on an
owner-carry loan is negotiable. Ask your agent to check with a lender or mortgage broker
to determine the current rate on institutional first (or second) loans.
Seller financing typically costs less than conventional
financing because loan fees (points) typically aren't charged. The interest rate on a
seller-carry loan will also be influenced by current Treasury bill and certificate of
deposit rates. Sellers usually aren't willing to carry a loan for a lower return than they
would earn if their money was invested elsewhere.
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- Is there a secret to good
negotiating?
There are several cardinal rules to
negotiating effectively. One is do your homework, and learn as much about the seller or
the buyer as you can. Another is to play your cards close to your vest and not reveal too
much information to the other party or their agent. Don't let yourself get rushed into any
decision, no matter how tempting it may be. Finally, if you have doubts about your
negotiating skill, hire someone to help.
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- Are interest rates
negotiable?
Some lenders are willing to negotiate
on both the loan rate and the number of points but this isn't typical among established
lenders who set their rates like large corporations set the prices on their goods.
Nevertheless, it pays to shop around for loan rates and know the market before you go in
to talk to a lender. You should always look at the combination of interest rate and points
and get the best deal possible.
The interest rate is much more open to negotiation on
purchases that involve seller financing. These usually are based on market rates but some
flexibility exists when negotiating such a deal.
When shopping for rates, look for published rates in local
newspapers or check the growing number of Internet sites that publish such information.
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© 2008 Century 21 Real Estate LLC. CENTURY 21 © is a registered trademark licensed to Century 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated.
